Analysts expected Tesla to haemorrhage money in the first quarter of this year, but few predicted the eye-popping $702 million loss that the electric car company reported last night.

In a call with investors on Wednesday, Tesla CEO Elon Musk pointed to the difficulty of trying to produce a global mass-market car from a single factory. “This is the most difficult logistics problem I’ve ever seen, and I’ve seen some tough ones,” he said.

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According to David Bailey, professor of industrial strategy at Aston Business School, and automotive industry expert, shipping cars overseas can add about ten per cent to production costs. That’s why Tesla is trying to expand, with a forthcoming factory in Shanghai that will give it a foothold in the world’s biggest electric vehicle market, and nascent plans to build an assembly plant in Europe.

But that’s not the whole story. “I don’t think this is just a supply side issue,” says Bailey. Tesla likes to paint a picture of unrelenting demand, with long waiting lists for its mass-market Model 3, which has a starting price of $35,000.

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But in the United States, a federal tax credit which knocked $7,500 off the price of an electric vehicle has been halved, and is due to drop to zero in 2020. In March, Musk sent an email to staff describing how the company is shifting away from showrooms in favour of online sales in an effort to cut costs.

These are partly growing pains. The Model 3 is the best-selling electric vehicle in the world, and Tesla went from producing 1,550 in 2017, to about 140,000 in 2018, amid reports of factory chaos and a noisy feud between Musk and the US Securities and Exchange Commission. This week, Musk blamed Panasonic, which supplies lithium-ion battery cells for Tesla’s vehicles, for holding up deliveries, which fell by a third between December and March. “This is a symptom of the problem plaguing Tesla,” says Alyssa Altman, who works on transportation and mobility at digital consultancy Publicis Sapient. “It struggles to fulfill its ambitious goals and promises, and stumbles at logistical challenges despite huge advances in technology that keep consumers and investors interested.”

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Bailey says it's a Catch-22 situation: “They need scale to get costs down, but they need lower costs to get scale.” The company had about $2.2 billion in cash at the end of the quarter - $1.5bn less than at the end of 2018, and Bailey says they’ll probably need to raise more money in order to fund the construction of the new factories that will be needed to deliver the Model 3 overseas.

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At the same time, old players are raising the stakes, with models such as Audi’s e-tron and the Mercedes-Benz EQ C muscling in on Tesla’s turf. Last year, Ford published its plans to invest more than $11bn in new vehicle technologies, and is building a new all-electric vehicle factory in Michigan. Renault is investing more than €1bn into four electric car plants in France. And Chinese companies such as BYD and Chery are partnering with Western companies on ventures in Asia, and beyond. "Model mix is also an issue,” says Dave Leggett, automotive editor at data and analytics company GlobalData. “Deliveries of the higher margin Model S and Model X models are drying up, with no refresh for either product scheduled anytime soon.”

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So far, Tesla has been resistant to partnerships, preferring to do everything in-house. But teaming up with one of the old guard through a formal partnership or licensing agreement could be the only way of saving the company from more bruising losses down the line, says Bailey. Companies such as Tata Motors, which owns Jaguar Land Rover, are desperate for Tesla’s sophisticated battery and self-driving technology, and already have the global network of factories and distribution centres that the company needs.

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This week, perhaps as part of a calculated distraction, Musk claimed Tesla would be operating autonomous robo-taxis by next year. Musk has always displayed the knack for seeing a different future, and nudging people in that direction.

But whether his company will form a part of the long-term electric vehicle landscape remains to be seen - it could, as Chris Moody of brand consultancy Wolff Olins puts it, end up being the “Zune of automotive” - the thing that paves the way for future success. “I think ultimately they will be successful in changing the world - they’ve made electric vehicles acceptable and sexy,” says Bailey. “But that doesn’t mean Tesla will survive.”